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Palmer says Ita sludge claim is just mud

Tailings dams at Clive Palmer's nickel refinery have reached capacity and operations have been suspended to prevent toxic waste from spilling into Great Barrier Reef waters.

Queensland government inspectors assessed the dams at the Yabulu refinery, north of Townsville on Monday after torrential rain from Cyclone Ita.

An Environment Department spokeswoman says Queensland Nickel has suspended its operations and no tailings are being dumped for the moment because the dams are overflowing into another holding pond.

No toxic waste has escaped into the broader environment and the plant has not exceeded its release limits.

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Environment health protection officers are taking samples at tailings release points and will continue to monitor the situation over the next few days.

Mr Palmer, a federal MP and mining magnate, accused the Queensland government of using cyclone Ita to sully his reputation.

"Instead of helping the people of north Qld @theqldpremier is leaking misinformation about Qld Nickel for political gain to @Australian ...," the Palmer United Party leader posted on Twitter on Monday morning (sic).

Queensland's Environment Minister Andrew Powell said concern about the possible leakage of toxic waste was valid.

"It would be unacceptable for environmental harm to be caused, and I take my job as a regulator very seriously and will be continuing to do so regardless of Mr Palmer," he told ABC radio on Monday.

Companies face a maximum fine of $1,100,000 for wilful breach of the Environment Authority, while individuals face a maximum fine of $220,000 or two years' imprisonment.

Mr Palmer later on Monday said the claims against the refinery were untrue and defamatory.

"On the one hand we have (Premier) Campbell Newman visiting the region offering to help during Cyclone Ita, and on the other hand we have Mr Powell directing officers from his department to our refinery during the cyclone period," Mr Palmer said.

"They have turned up at the refinery at the express direction of the minister trying to find something wrong when there is nothing wrong.

"Mr Powell should apologise to the hard working staff of Queensland Nickel."